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PRESENT VALUE: The amount of money today that, after interest is added, would have the same value as an amount some time in the future. For example, $100 today, given a 10 percent interest rate, would have a value of $110 in one year ($100 plus $10 in interest). Conversely, $110 in one year, given a 10 percent interest rate, would be equivalent to $100 today. The process of translating a future payment into its present value, such an amount to be received when a bond reaches its date of maturity, is often termed discounting.
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Lesson 18: Banking | Unit 4: Regulating Banks
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Page: 20 of 24
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How are banks regulated?- First: Government regulators say do something, and if you don't do it, then you suffer the consequences--dollar fines, losing operating control to regulators, or spending a little time in jail.
- Second: Many bank regulations involve accounting procedures and practices. The FDIC and Comptroller of the Currency are the institutions that take care of these matters.
- Third: The regulations we are most concerned with are those involving reserves and deposits, which play a key role in controlling the money supply.
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INVESTMENT BUSINESS CYCLES The notion that business cycles are caused by changes in business sector investment expenditures triggered by the natural ebb and flow of market conditions. This investment explanation of business-cycle instability rests on the proposition that the seeds of each subsequent business-cycle phase are planted during the current phase. An expansion creates the conditions that cause a contraction and a contraction creates the conditions that cause an expansion. This explanation suggests a critical role for government intervention and stabilization policies to correct the business-cycle problems of inflation and unemployment.
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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PDI
Personal Disposable Income
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